Crypto enthusiasts are becoming more and more positive this 2024, with many saying the crypto winter is nearing. Bitcoin (BTC-USD) paves the way for this optimism, with the launch of highly-anticipated spot Bitcoin ETFs now approved by the Securities and Exchange Commission. Accordingly, a wave of capital is expected to continue to flood into this sector, which should be a rising tide that lifts all boats.
Of course, predictions of another major bull market rally are fun. However, caution is still highly advised. Quality over speculation is the key, and while smaller blockchain projects do have more upside, risk management is always important to consider.
Recent catalysts bode well for Bitcoin and other major crytpos. Therefore, let’s explore three tokens in the larger-cap space with some of the best upside potential and risk/reward ratios, relative to higher-growth smaller-cap options.
Ethereum (ETH-USD)
With Web3 as its strong driving force, Ethereum (ETH-USD) has gained a lot of traction and popularity alongside Bitcoin. While both cryptos have resilience and strong returns since last year’s summer, Ethereum’s utility still overshadows Bitcoin’s. Further, Ethereum is the dominant player in key utility-generating areas of the market, such as decentralized finance (DeFi) applications, NFTs, and other Web3 projects.
After Bitcoin’s ETF launch and approval, many analysts are also anticipating for Ethereum to have its own ETF. This has sparked an incredible amount of investor interest, resulting in an impressive double-digit surge following the announcement. According to some analyst reports, the SEC is deciding on Ethereum ETFs next. The approval is likely expected by mid-2024. Once that happens, speculation will intensify and resemble the same reaction Bitcoin saw heading into its ETF announcement.
Last week, Ethereum saw a significant 7.5% decline, exceeding Bitcoin’s 7% loss. Ethereum now sits at its 50 day moving average after the short decline. Although investors are warned to be cautious, Ethereum still remains resilient through market shifts. Hence, this makes it a worthy mega-cap investment in addition to Bitcoin.
Avalanche (AVAX-USD)
A blockchain platform purposefully designed for DeFi, Avalanche (AVAX-USD) is one token any crypto investor should consider. It boasts robust tools for scalable financial solutions.
Avalanche utilizes smart contracts to allow for a wide range of decentralized applications to be built. The project’s blockchain is extremely fast, with most transactions completed in under a second. This highlights Avalanche’s efficiency and speed advantages relative to other blockchains.
The best thing about Avalanche? It also works with Ethereum tools. The blockchain supports user-defined governance rules as well. This enables other tailored blockchain networks for more expansive and diverse purposes. Additionally, it fosters interoperability across various applications and networks.
As 2023 concluded, AVAX surged 150% due to its Avalanche Rush’s $180 million initiative. Also, it surpassed Solana and Fantom in terms of total value locked. In fact, AVAX tokens saw an absolutely incredible increase. More of that could be in store, if a bull market rally forms this year.
Optimism (OP-USD)
A prominent Layer-2 protocol supporting Ethereum, Optimism (OP-USD) is a token to consider, if you believe a bull market is forming.
Why? OP addresses many of the scaling challenges seen with the Ethereum ecosystem. This has led Optimism to accumulate an impressive $500 million in total locked value (TVL). That’s a key metric, as it exemplifies the project’s long-term potential. And, users have broadly decided that putting their capital to work within the Optimism ecosystem makes sense.
During 2023’s bull market rally, specific Layer-2 protocols like Optimism and Polygon outperformed. Despite its recent disclosure, Optimism has gained traction among investors and developers alike. As a leading Layer 2 protocol, OP utilizes off-chain transactions to improve speed and efficiency. Accordingly, it’s a platform that relies on fraud proofs that validate both authenticity and accuracy for every transaction.
Ranked 32nd in terms of market capitalization, Optimism is primarily middle-of-the pack in relation to $2.7 billion market cap. For those who believe this token will continue seeing outsized growth, as other scaling solutions have, it’s one to consider owning.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
